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The Moscow Exchange has announced a move to give investors up to two days after a trade to settle securities rather than demanding all collateral upfront, in a bid to attract more international participants to its platform.

Starting today, the exchange will move from its current process of demanding all cash and securities for a trade to be deposited immediately, known as T+0, to now allow investors up to two days to deposit collateral, on a T+2 settlement period.

The move marks the Russian platform’s latest effort to better align itself with global financial market practices to attract more international investors to the exchange, after merging its two main exchanges – Micex and RTS – in December 2011.

Alexander Afanasiev, Moscow Exchange chief executive, said: “The system of pre-payment for trades played a positive role as the Russian securities market was getting off the ground. Trading in Russia is now integrated into the global financial markets and our issuers expect the latest in settlement and risk management tools.

“The globally recognised T+ settlement model lowers costs for market participants, increases efficiency of deployed capital and will lead to higher trading volumes. This system is already in place on Moscow Exchange's foreign exchange market; now has come the time for it to be implemented on the equities market.”

Lynton Jones, chairman of exchange consultancy Bourse Consult, said: “For several years there was a view that shorter and shorter settlement periods was the way forward. T+0 was the nirvana everyone aimed for. Now it has become clear that a number of the biggest institutional investors actually prefer a slightly more flexible regime especially when trading in some of the more 'testing' markets.

“I think the move by the Moscow Exchange is sensible and should attract more foreign institutions to their markets. Emerging markets are clearly becoming more alive to the needs of the major international institutional investors.”

The exchange will gradually transition all of its securities over to the T+2 settlement period, starting with 15 of the most liquid stocks and all government bonds, with all securities to then be traded on a T+2 basis from January 1 2014.

It currently has capacity for 90 investment banks and brokers to settle on a T+2 basis, with access to the new settlement process expected to be available to all trading members by July.

The news comes as new regulation is looking to bring the whole of Europe onto a T+2 framework under the Central Securities Depositories Regulation.

The Moscow Exchange has made a number of moves to make the platform more attractive to international investors post merger, including opening up its bond market, with Belgium-based Euroclear Bank settling deals in Russian treasury bonds for the first time in February, shortly followed by Clearstream, the clearing and settlement division of Deutsche Börse, in the same month.

The exchange went public last month in Moscow, raising just under $500m and valuing the bourse at around $4bn.

Virginie O'Shea, analyst at Aite Group, said: “A T+0 set up is almost impossible for some international investors to operate on if all of their other trades are working on a two- or three-day settlement process, so it’s a very sensible move by the Moscow Exchange.

"One of the reasons Europe has found it so hard to go the other way and shorten its settlement periods is because there is a lot of legacy architecture out there. If you’re working from a blank canvas, like many of the emerging market exchanges are, then it is much easier to adjust to market demands like this.”